Morning Update: Path of Least Resistance is Up? But by how much?
Tight consolidation patterns are akin to a poker player with no “Tells”, who displays a stoic face, and keeps the playing cards close to his vest. Many times, these patterns can be difficult to interpret and only reveal what they are immediately prior to concluding. When I find myself in a position where the market fits this poker analogy description I get into all the time-frame duration charts. Starting at the daily and concluding in the smaller time frame fractals. I take on the role as an investigator.
Follow along with me while to go through that exercise.
In the above daily futures chart, the first observation I make is the daily MACD has reset itself. Therefore, the intermediate term momentum is uncommitted, and not leaning in one direction or the other. I determine the daily chart is not going to give me many clues in determining how this tight consolidation reconciles itself....so I move on.
The above 4-hour chart also has no MACD clues, but now I can see the consolidation more clearly. The overlap is very prevalent. On each occasion price has managed to rally, the corresponding retracement has been deep. This consolidation pattern could be a flat or become impulsive. But what I am seeing in the 4 hour chart is this pattern is mature to the point that whatever it will conclude as, it needs to happen soon.
In the micro chart I get to see the detail of the overlapping price action. The pattern does not appear to be imminently bullish. I am expecting a final c-wave higher and since an impulsive pattern higher has not invalidated (below 3815 invalidates any impulsive pattern higher) we still have a chance to shoot higher into the 3985-4031 area. However, the time to do that is running out. I believe in today's session we will have enough price action to complete this consolidation pattern and provide us with it’s final clues as to what it is...an ABC flat that reconciles in the 3917 area, or a more standard ABC retracement that could reach as high as 4,031.
Based on the amount of the pattern I have to observe, I believe the FLAT is most probable. In either case I believe we will get our answer today.
Best to all,
Chris
Follow along with me while to go through that exercise.
In the above daily futures chart, the first observation I make is the daily MACD has reset itself. Therefore, the intermediate term momentum is uncommitted, and not leaning in one direction or the other. I determine the daily chart is not going to give me many clues in determining how this tight consolidation reconciles itself....so I move on.
The above 4-hour chart also has no MACD clues, but now I can see the consolidation more clearly. The overlap is very prevalent. On each occasion price has managed to rally, the corresponding retracement has been deep. This consolidation pattern could be a flat or become impulsive. But what I am seeing in the 4 hour chart is this pattern is mature to the point that whatever it will conclude as, it needs to happen soon.
In the micro chart I get to see the detail of the overlapping price action. The pattern does not appear to be imminently bullish. I am expecting a final c-wave higher and since an impulsive pattern higher has not invalidated (below 3815 invalidates any impulsive pattern higher) we still have a chance to shoot higher into the 3985-4031 area. However, the time to do that is running out. I believe in today's session we will have enough price action to complete this consolidation pattern and provide us with it’s final clues as to what it is...an ABC flat that reconciles in the 3917 area, or a more standard ABC retracement that could reach as high as 4,031.
Based on the amount of the pattern I have to observe, I believe the FLAT is most probable. In either case I believe we will get our answer today.
Best to all,
Chris
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